TEACH CHIL­DREN MONEY SKILLS

The Denver Post - - BUSINESS - By Alex Veiga

A part-time sum­mer job can teach teens the value of earn­ing a pay­check, but not nec­es­sar­ily how to man­age their money wisely.

That’s a job par­ents should take on, and the ear­lier the bet­ter, ex­perts say. Teach­ing teens the ba­sics of sav­ing, fol­low­ing a bud­get and the prin­ci­ples be­hind re­spon­si­bly man­ag­ing check­ing and credit ac­counts can in­still healthy fi­nan­cial habits that will serve them well as adults.

But many U.S. teens aren’t be­ing taught these skills, ac­cord­ing to a re­port re­leased last month by the Pro­gramme for In­ter­na­tional Stu­dent As­sess­ment. The or­ga­ni­za­tion, which eval­u­ated fi­nan­cial lit­er­acy among thou­sands of 15year-olds in 14 coun­tries, con­cluded that one in five Amer­i­can teens lack ba­si­clevel skills, more than in Russia, China or Poland.

“Fi­nan­cial lit­er­acy is a key com­po­nent to un­der­stand­ing gen­eral money man­age­ment and credit ba­sics, but a ma­jor­ity of Amer­i­can teens are not fi“Not

nan­cially lit­er­ate,” said Heather Bat­ti­son, vice pres­i­dent at credit re­port­ing com­pany Tran­sUnion.

Here are some ways par­ents can be­gin teach­ing their chil­dren money man­age­ment skills, even from a very young age:

Start early: Teach­ing kids good fi­nan­cial habits can be­gin when chil­dren are around 5 years old, or when they typ­i­cally be­gin ask­ing for an al­lowance, ac­cord­ing to a guide for par­ents pub­lished by the Na­tional En­dow­ment for Fi­nan­cial Ed­u­ca­tion (NEFE), a non­profit fo­cused on fi­nan­cial lit­er­acy.

Par­ents can ex­pect their child to spend their al­lowance all at once, but should use that as an op­por­tu­nity to dis­cuss how to treat the next week’s al­lowance.

“There are many things at ac­tu­ally quite a young age that chil­dren will un­der­stand,” said Ted Beck, the NEFE’s pres­i­dent and CEO.

As chil­dren hit their pre­teen years, NEFE’s guide also sug­gests par­ents ex­plain how bud­gets work, as well as the ba­sic prin­ci­ples of in­vest­ing.

Fo­cus on sav­ings: En­cour­age kids to set aside money they get for do­ing chores or presents in their own sav­ings ac­count. This will help show them the im­por­tance of sav­ing up for a big pur­chase, and how bank sav­ings ac­counts work. Share your mis­steps: Par­ents should be open to dis­cussing their own fi­nan­cial mis­takes with their kids, as long as the con­cepts in the les­son would be some­thing their chil­dren

are old enough to un­der­stand, Beck said.

“It’s OK to show you’ve made some mis­takes and what you learned, but do it as a dis­cus­sion, not a lec­ture,” he said.

Care­ful credit use: Kids un­der 18 are not al­lowed to open a credit card ac­count on their own. Use of pre­paid gift cards in high school can help es­tab­lish good credit use habits.

“Ex­plain to them the im­por­tance of re­spon­si­ble credit man­age­ment like pay­ing bills on time and us­ing a small por­tion of their avail­able credit to main­tain a low credit uti­liza­tion,” Bat­ti­son said. “We hear from con­sumers of­ten that have low credit scores be­cause of some mis­step that they made when they were younger.”

Marisa Wo­j­cik, The Eau Claire Leader-Tele­gram

Kurt Kern, a fi­nan­cial ad­viser at Ameriprise Fi­nan­cial, ex­plains dif­fer­ent op­tions for sav­ings and in­vest­ments to high school se­niors at an event in Eau Claire, Wis.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.